Positive Signals On Trade Deal Delivered By Trump And Xi

11/24/2019

There was some relief in the global financial markets about rising possibility of the more than one year old trade war between the United and China would ultimately get diffused after the leaders of the two largest economies of the world both expressed and reiterated their intention to complete and sign an initial partial trade agreement which has been dubbed phase one of the trade agreement.

China desires to finalize an interim or "phase one" trade pact, but would not be constrained to retaliate when necessary, said Chinese President Xi Jinping on Friday in a rare public comment by him on the trade tensions with the United States.

Within hours of Xi’s comments on the trade war and the trade agreement, US president Donald Trump also stressed that a trade accord with China is "potentially very close". He however also insisted that any deal would be finalized only if it was in favour of the United States so that the years of trade imbalances with China could be rectified.

Trump also urged China and Hong Kong to calm the situation in Hong Kong while speaking on Fox New Channel's Fox & Friends. Hong Kong has been troubled with months of pro-democracy protests, which sometimes turn violent, and one that has affected business and normal life in the Asian financial hum.

There have been repeated warning by global financial and economic think tanks and bodies about the threat to the growth of the global economy because of the trade war between the two countries. It is also blamed for the disruption of the global supply chains, bringing down business confidence and impacting business investments.

"We want to work for a 'phase one' agreement on the basis of mutual respect and equality," Xi told representatives of the New Economy Forum organised by Bloomberg LP, according to reports. "When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want," he said.

Earlier this week, there were reports that Trump sing into law a legislation passed by the US Congress that seeks to lend support to protesters in the Chinese-ruled city of Hong Kong which brought down the global financial markets over fears that such a new law by the US could derail trade negotiations between the two countries.

Intentions of Trump were not made clear by him during his interview to Fox News as he said: "We have to stand with Hong Kong but I'm also standing with President Xi."

The markets were weighed down by concerns over a broader deterioration in Sino-US bilateral ties. In recent days, China was miffed after reports that of US Navy warships sailed near islands claimed by China in the South China Sea twice.

According to reports quoting sources form the US administration that the two countries could sing the phase one of the trade agreement some time at the beginning of next year because Beijing has been demanding a broader rollback of import tariffs in the agreement while the US has placed its own demands from China.

Xi's insistence on "equality" was a cause of concerns, Trump said, and said that large Chinese trade surpluses had cause losses to the US economy.

"I told President Xi, 'This can't be like an even deal. We're starting off from the floor and you're already at the ceiling,'" Trump said in the Fox News interview.